Potential Sales Tax on Boston Homes (Brookline: leases, insurance, buying a house)

[btownboss4]

Originally Posted by MikePRU

Bottom line is the folks who end up paying the tax are not going to be the ones that suffer because they will seek to reclaim those funds from people who are less capable of absorbing the expense. Whether it's trying to squeeze the contractor during a renovation or higher rent for the tenant someone else is really going to be footing this bill and not the intended target of the law.

So I do believe the people who will truly be impacted by this tax actually may be living on the edge.

No they won’t bevause they’ll have to compete on the open market with unrevoated buildings that have been there forever.

[id77]

Originally Posted by MikePRU

Got this email yesterday from the Greater Boston Real Estate Board:



Personally, I would agree that this tax is discriminatory. I'm not opposed to wealthy people paying more in taxes than lower income folks. However, I think it's unfair to ONLY tax them. If you're going to have a tax then everyone should be subject to it to some degree IMO.

My MUCH larger issue though is the section which says that the tax rate jumps to TWENTY FIVE PERCENT if the property is again within 24 months. This is going to discourage development and chances are if a homeowner is selling again this quickly it's because of a hardship. Plus many people even at the $2M level with mortgage rates so low are still only putting down around 20% which would mean they'd have to show up at the closing with cash in order to sell. At the lowest property value ($2M) this would mean $100K (5%).

Also, I take issue with the fact that the tax is based on sale price and not sale proceeds.

I know many will say "these people are rich and can handle it." Not really the point about whether they can afford it or not.

I see this tax as a move right at parties who seek to buy up Boston properties to convert/flip them in a short turnaround at a profit or for investors looking to move properties at a profit. I have less than no sympathy for either group, so I say let this tax fly. The "developers" who come in and flip old buildings into disgusting IKEA showrooms are a scourge on the local housing market.

• Exempt Properties: (i) transfers between family members; (ii) transfers of convenience as may be defined by ordinance; (iii) transfers to the government of the United States or the Commonwealth (iv) taxpayers approved by the City for an exemption for residential real property pursuant to section 5C of chapter 59 of the General law for the property to be transferred, and (v) transfers for which the sale price is under $2,000,000.

The exceptions more than cover typical legitimate sales of properties. In particular, section 5C deals with owner-occupied, so someone who lived in their condo/home and sold it for over $2 million is not going to be impacted by this. Likewise for family transfers and other movement within a group.

Let's not vilify this law to protect a class of people who deserve no such protections.

[UniKidNow]

I think this is going to blow up in the cities face when the majority of boomers retire in 2022 and no longer want real estate as investment vehicles. REITs are going to take a big hit

[UniKidNow]

Originally Posted by timberline742

I don't have a position on this proposal, but this IS kind of the point.


We are chronically underfunding our public institutions at almost every level. Our economic system and the rules governing it are directly set by those that can afford access to the political systems. That is why with the expanding economic pie, those gains are almost entirely funneled directly to the elite. The elite makes the money from the society on the rules they construct. It's about time they return some of that money, probably a pittance of what they're taking out, and fund the public institutions and infrastructure that is in dire need.


That said, I see no chance of this really passing as the ruling elite will not allow it. Or if it passes, it will be at very different levels that will generate a token amount.

The public institutions are underfunded because those same elites that you complain about pay themselves exorbitant salaries through them. They also **** the money away on useless projects and expenses, even as complainers like yourself continue to vote for them....

[timberline742]

Originally Posted by UniKidNow

The public institutions are underfunded because those same elites that you complain about pay themselves exorbitant salaries through them.

Nope, not at all. Public institution pay is quite modest to low for the responsibilities that they entail.
And "elites" aren't working for salaries at these places.

Originally Posted by UniKidNow

They also **** the money away on useless projects and expenses, even as complainers like yourself continue to vote for them....

They do? Sorry, I don't think roads, schools, bridges, parks, conservation land, social services, ports, etc to be "useless projects" or "expenses". I vote for the ones that continue to fund these important services.


You are completely off base.

[MikePRU]

Originally Posted by id77

Let's not vilify this law to protect a class of people who deserve no such protections.

I don't care who you are or what you do. A tax that jumps from 6% to 25% is just unfair. The rate jump if the property is sold within 24 months is probably the biggest issue I have with this.

Regardless, it passed the council vote and is moving on to the next stage of approval.

[id77]

Originally Posted by MikePRU

I don't care who you are or what you do. A tax that jumps from 6% to 25% is just unfair. The rate jump if the property is sold within 24 months is probably the biggest issue I have with this.

Regardless, it passed the council vote and is moving on to the next stage of approval.

It's not meant to be fair; it's meant to be punitive and to discourage the aforementioned activities that are done in excess with homes today.

I suspect it was modeled after the tax in BC that was passed in response to Vancouver's very similar problem (https://en.wikipedia.org/wiki/Bill_28_(British_Columbia)).

[NorthofHere]

Originally Posted by btownboss4

Most people don’t have $2M properties and those who do I think will be okay. They aren’t living on the edge.

Thus isn’t a sales tax on groceries it’s a sales tax on a luxury

Seriously? My parents bought a house in 1959 for $12k, we sold it a few years back for $379K. That same house in another more wealthier town was valued over $500K and it was purchased for just about the same amount of money in the 60's. Imagine your mother and father bought a house in 1955 for $50K in Boston and it is now valued at $2.5M. They have passed away and now you sell it but hey you pay 6% to the realtors and now another 3% to Boston and you pay other closing costs. Your buyers learn of this new tax and decide hey we'll offer them at least if not more than 3% less. You and your siblings are now out probably over $300K. You and your siblings while doing ok are not wealthy. How is this fair? Aren't they satisfied enough with property tax now they want a sales tax that is unreasonable?

Do you honestly think this won't discourage people from buying in Boston. They'll go out to the suburbs and purchase instead. 6% is far too high.

I am so glad I moved out of Massachusetts years ago. Have no intentions of ever going back.

[City Guy997S]

Originally Posted by NorthofHere

Seriously? How is this fair? Aren't they satisfied enough with property tax now they want a sales tax that is unreasonable?

Do you honestly think this won't discourage people from buying in Boston. They'll go out to the suburbs and purchase instead. 6% is far too high.

I am so glad I moved out of Massachusetts years ago. Have no intentions of ever going back.

Want an example of how this type of tax blows up in the face of the govt that proposed it? Look at the Bahamas, they have 10% transfer tax (7.5% vat and 2.5% something else) plus the 6% RE commission and the 10% stamp tax. They had huge plans for this extra 10% windfall, until.............sales died off! Keep in mind this is on the gross sale regardless if you make/lose money on the deal!

Buy a place for 1mm, hurricane wrecks the island/light damage on your place and you sell for 700/ then you lose 140K in taxes plus real estate commission (42K). So your 1mm place sells for 700 and then you lose 182K off that netting 518K........yeah hard pass on that bad idea

[Shrewsburried]

Originally Posted by NorthofHere

Seriously? My parents bought a house in 1959 for $12k, we sold it a few years back for $379K. That same house in another more wealthier town was valued over $500K and it was purchased for just about the same amount of money in the 60's. Imagine your mother and father bought a house in 1955 for $50K in Boston and it is now valued at $2.5M. They have passed away and now you sell it but hey you pay 6% to the realtors and now another 3% to Boston and you pay other closing costs. Your buyers learn of this new tax and decide hey we'll offer them at least if not more than 3% less. You and your siblings are now out probably over $300K. You and your siblings while doing ok are not wealthy. How is this fair? Aren't they satisfied enough with property tax now they want a sales tax that is unreasonable?

Do you honestly think this won't discourage people from buying in Boston. They'll go out to the suburbs and purchase instead. 6% is far too high.

I am so glad I moved out of Massachusetts years ago. Have no intentions of ever going back.

It encourages the living to provide utility with their capital versus coffering it for their offspring who did not "earn" the capital in the first place. It's very fair, IMO.